Tuesday, May 14, 2019

Agencies Should Charge Their Clients Overtime

Last week I wrote about the absurdity of the hours ad agency employees work.  This post is an addendum.

Ad agencies charge their clients what is called a “blended rate”  (This is the combined average salary of everyone working on an account.)  It includes the salaries of administrative help, back office people, account managers, planners and strategic people and all levels of creative executives as well as management.  From my conversations with people in the know, this rate actually may cause agencies to lose money, since, ultimately, clients dictate the amount they are willing to pay; if senior people spend more time than estimated or agreed, clients do not pay accordingly.  Agencies accept the blended rate, even at a loss, because they are desperate for new business, especially the network-owned ad agencies. Under this system of compensation, there is always another agency that is willing to accept lower pay.

If a significant number of ad agency executives are working long hours on a constant basis, they should be paid overtime and/or given a bonus and their clients should be charged accordingly.  When I was discussing this concept with a senior executive, he reminded me that most executives are considered “exempt”.  Under the Fair Labor Standards Act (FLSA), exempt employees are not entitled to overtime.  However, in reading the law, a company may pay exempt employees overtime or bonuses, at their discretion. 

If collected, this money should be passed on to employees who work long hours, either in the form of frequent bonuses or as pure overtime pay.

If ad agencies did this several things would happen.  Most important, clients would insist that their agency people work fewer hours so that they pay less to the agency. Paying overtime to agencies would result in happier employees and might reduce turnover significantly. In last week’s post, I told the story of one creative director who resigned over her long hours.  If agencies and their clients paid overtime and limited the amount of time that people had to work, it might attract more talented employees.  Which means that It might generate better work (contrary to some popular belief, when people are tired, they cannot do their best work). 

When I wrote this post last week, I received many comments from people who had left the advertising business for exactly this reason.  Long hours and low pay are not compatible.  I know that paying overtime or consistent bonuses for long work is only a pipe dream, but I wish it would happen.

When agencies were paid by commissions, profit margins were higher so agencies could afford to take care of employees who worked long and hard.  Not so much anymore.  Pity. 

Tuesday, May 7, 2019

Ad Agency Working Hours Are Absurd

Typically, most service companies – lawyers, accountants and ad agencies of all kinds – do not charge their clients overtime for executives. But in advertising, agencies and their clients (through their procurement departments) have abused this practice.  It doesn't matter if it is digital or traditional, they are all the same. There is no reason for agency people to regularly work ten or twelve hours a day – or more. Seventy hour weeks are not uncommon - that is the equivalent to holding down two jobs.

Traditionally, ad agency creative departments have worked long hours.  This is nothing new.  But today it has gotten worse. (This is also true of account people, planners and media executives.)
Clients pay their agencies what is called a “blended rate”.  This is an average amount of the estimated time for all people at all levels who work on an account.  It has almost nothing to do with real time costs, but by senior people working long hours agencies can bill more time; unfortunately employees do not share in this windfall.  It is an absurd system.

I know at least one senior creative director who was making $300k a year who left the business after working for one agency (for over seven years), but typically worked from 9:30 in the morning until close to midnight (or later) four to six days a week.  Prior to presentations, she worked seven days a week, often just napping in the office.  This is how agencies and the procurement people from their clients have gotten around proper staffing; On paper one person looks better than two or three.  In other words, one senior person working late and long is perceived to be more efficient than two people working normal hours.  The creative director mentioned above should actually have been making more money since she was doing the work of two or three people.  But ad agencies don’t pay that way since their clients dictate how they can staff and, essentially, compensate their employees. 

The way client fees are now managed means that clients are in charge of and actually manage their own agencies.  I wonder if they do this with their legal firms or accountants.

Law firms are legendary for paying people right out of law school $100k or more. Those people work impossible hours but the reward for long work is the possibility of partnership and big bucks.  Ad agencies, on the other hand, pay entry level executives $40-60k with the possibility of getting a 5-10% raise each year, if that.  That is one of the reasons why so many advertising people change jobs frequently – with each change they can boost their salary by a significant percent, an amount higher than if they stayed.  Since advertising, despite all the changes in the business, is still about creativity – at all levels and from all employees – not paying well and not offering incentives to stay makes absolutely no sense.

Creativity cannot be quantified or output measured by hours worked.  It just doesn’t work that way.  Yet that is the way that time sheets are analyzed; agency people are not paid for the ideas developed in the shower or while raking leaves.  Rather, it is almost as if the employee who works longest in the office gets the most accolades.  

In the Mad Men era, it was not uncommon for strange, fun things to happen at ad agencies.  There were many water fights in the creative department where everyone got soaked.  I remember one head of account services who took his account group to the movies during lunch on a frequent basis.  On shoots, the creative people would sneak in an extra day or two to relax, especially if they had to work for many days away from home.  Lunches could be long, with or without alcohol.  

 All this to promote and nurture creativity, relaxation and job enjoyment.  Can you imagine these things happening today?

I would love to hear your comments.

Tuesday, April 30, 2019

Good Managers vs Bad Managers

The hardest thing I had to learn about managing people was that there is no one who will do things exactly like me.  I had to learn that the end result was what counted, as long as it was right, to my standards and timely.  When delegating work, this is a really hard thing to learn.

There are so many managers who are "screamers".  Many of them get frustrated because their subordinates do things in their own way to get to the desired results.  The screamers have fragile egos and believe that no one can do work as well as they. So when those who work for them don't handle things in exactly the way the manager would (even if they end up in the same place) they get yelled at.  Bad manager.

From working at agencies, I knew both good and bad managers.  But when I became a recruiter, I relearned this lesson again early on. I was quickly successful and was called by one of the best known advertising recruiters. She offered me a job as president of her firm.

As part of my due diligence, I visited her office.  The first thing that happened is that she had her four or five employees actually lined up and, literally, standing at attention as I entered her office.  They were standing in line to introduce themselves and shake my hand. It was a scene from a B movie; the formality of it was really a turn-off.  Even her office layout was difficult for me.  All her recruiters worked in one room (not uncommon, although I am not a believer in open plan seating) with her desk raised a couple of steps above her people so she could overlook (looking down would be a better description) her employees who sat below her. She told me that the positioning of her desk allowed her to insure that her recruiters were constantly making calls and she could listen to and correct what her recruiters were saying.   

She made it clear that doing this would be an essential part of my job. I knew that that would be impossible for me and turned the job down.  Not surprisingly, I subsequently learned that the turnover there was high.

Good managers know that everyone is different, that everyone approaches problems differently and that no two people are alike; what is important is the result, not the process of getting there.  Bad manages get angry at everyone who works for them because they do not do their jobs or say what they have to say in the same way that the manager does.

Good managers know that there are many ways to achieve good results.  They encourage their people to achieve results in their own way.  Bad manages try to make everyone work like they do, which is impossible.

Good managers allow their people to fail.  That’s right.  Good manages encourage innovation.  If someone has an idea, as long as failing doesn’t cost business, employees should be allowed to try.  And if they fail, they will learn from their errors.  Bad managers rarely innovate; more often than not, they perpetuate their own mistakes.

Good managers correct employees when they have made a mistake.  Bad managers merely scream and often curse.

Good managers rarely raise their voices and never belittle their employees.  Bad managers tend to constantly putting their people down, often in front of others.

Good managers know that they cannot be perfect all the time.  Perfection, by its very definition, can only happen once.  Good managers have high standards and always try to achieve or exceed those standards.  Bad managers have intolerance for people who do not do it their way and who are not perfect in every endeavor.

Good managers are friendly and interested in their subordinates, even if they are not friends.  Bad managers are disinterested and rarely friendly.

Good managers push their subordinates, allow them to get exposure to management.  Bad managers often take credit for work others have done and keep their people away from management.

Good managers go to bat for their employees in terms of raises and promotions.  They give accurate and actionable performance reviews, even if those reviews are not required by management.

Employees who work for good managers always know what is expected of them and how they are doing.  Bad managers give little feedback and often surprise subordinates with negative appraisals.

People who work for good managers are likely to work harder, be more productive and actually remain in their jobs longer.

Life is too short to work for bad managers.
Creative Commons License